Feb. 25, 2001 - Sun Microsystems chief executive officer Scott McNealy slung his sharpest barbs on Saturday not at archrival Bill Gates but at the federal government for its perceived role in the nation's economic downturn.

Taking time off from a vacation to speak to a Denver networking group, the sharpwitted McNealy blamed government mismanagement for the country's high energy prices, lack of an energy strategy and relatively high interest rates, among other things.

"I will tell you we've got some serious fundamental problems with the economy right now, and it's about to go bad," McNealy told an audience of about 175 people assembled by TiE-Rockies, a networking group of Indian, Pakistani and Nepalese entrepreneurs. The event took place at the Adam's Mark Hotel in Denver.

"We've got incredibly high energy costs and no energy strategy," he said. "We have not allowed nuclear power since Three Mile Island. Second, on top of high energy costs, we have incredibly high interest rates, due to ... (Federal Reserve Chairman) Alan Greenspan. He raised interest rates at exactly the wrong time."

McNealy described as misguided Greenspan's decisions to raise interest rates during the high-flying late '90s because of inflation concerns.

With the addition of high taxes and a "bloated" government, "you have an amazing strain on the economy," he said.

McNealy's remarks came two days after his company lowered its predictions of its future sales and profit for the second time in two months.

Palo Alto, Calif.-based Sun, a producer of massive server computers for running corporate networks and Web sites, has suffered as the faltering economy caused its customers to curtail their spending on computer systems.

The company's stock has fallen nearly 68 percent from its yearly high in September.

That decline was hastened in January after Sun revealed that its sales growth and profit margin from its last quarter fell a few percentage points below their predicted levels of 49 percent and 50 percent, respectively.

Sun has all but instituted a hiring freeze in Colorado, where it employs 3,200 people.

McNealy predicted the American economy will see significantly more layoffs in coming months. Yet he added that the increasingly volatile nature of the economy might produce a recovery as quickly as it did a downturn.

On other topics, McNealy advised entrepreneurs to choose strong leaders for their governing boards, remain true to their characters, prepare to spend more time building a company than they anticipated and embrace risk.

McNealy's views on the economy struck home for many in his audience.

"Everyone's been blindsided," said Sureel Choksi, chief financial officer of Broomfield-based Level 3 Communications, which has seen its stock fall roughly 65 percent since September.

"He was very candid. The market and the economy have changed so rapidly that I think it's humbled a lot of people."

Copyright 2001 The Denver Post. All rights reserved.This material may not be published, broadcast, rewritten or redistributed.